Traders bet on continued rally.
The February $200 call option on Visa (V) saw a 10-fold surge in volume, going from 140 open contracts to seeing over 1,400 trade hands.
The bet, expiring in 57 days, is that shares can move up to $200 from their current price near $188. The $12 move in shares is about a 6.4 percent rally.
- [URGENT] Google Just Poured $4 Billion Into THIS...
The world’s most successful tech industry giants are all clamoring to get their hands on a new piece of technology.
It’s NOT bitcoin.
It’s NOT 5G.
And it’s NOT cannabis.
It could be bigger than all of those. Because if history is any indicator, you could be looking down the barrel of 5,000% profits... or even more.
Companies all over the world are funneling as much money as they can into what Bill Gates calls, “the holy grail” of modern technology.
The option buyer paid $1.02, or $102 per contract, making for an inexpensive way to bet on the current rally in shares to continue.
Visa shares have had a fantastic surge this year with a 53 percent rally.
Action to take: As part of a payment system oligopoly with a fantastic 53 percent profit margin, this is one company worth owning at the right time and for the long haul.
With shares trading at 25 times forward earnings, however, they’re a bit pricey.
While the market rally looks likely to continue in the next few months, however, an option bet like this February trade looks like a good one for double-digit return potential.
Those looking to buy shares, however, should consider waiting for a pullback later in 2020. Based on the company’s current move, a decline into the low $170 range will give an entry price where investors can get growth at a fair price without overpaying.
Shares have repeatedly dropped into this range in the past year after getting into the $180 range.